Zuckerberg retains control forever, even after his death

And what happens when other holders of the class B super-voting stock decide to sell their shares, as some early investors will no doubt do when the company starts trading publicly? At that point, they are automatically converted to class A shares, which means Zuckerberg’s control over the voting structure effectively remains the same. And the Facebook founder even has the right to transfer control of the company to a handpicked successor after his death.

Is giving the CEO ultimate control good or bad?

In Silicon Valley in particular, where entrepreneurs are seen as a special breed, retaining control over your company is viewed as a positive thing. Zuckerberg has been congratulated by many insiders for managing to keep an iron grip on the company through multiple rounds of financing. And this perspective is understandable for entrepreneurs, many of whom are afraid that their successful company will be taken over by VCs or others who don’t have its best interests at heart, as Apple was early in its history.

Did the kind of control that Steve Jobs wielded over Apple ultimately result in some incredible, world-changing products? Sure it did. And shareholders who have seen their investment multiply a hundredfold are likely unconcerned about any of the board or option irregularities. But does the end always justify the means?

Selling shares to the public is supposed to come with a certain amount of responsibility to those shareholders, and they should have the ability to hold a CEO and a board accountable if decisions are made that go against their interests. But controlling almost 60 percent of the votes and a majority of the board means Zuckerberg gets to fundamentally do whatever he wants with Facebook — and public shareholders are just along for the ride. Investors should be aware of that before they decide to buy a ticket.